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FHA Lending Is Booming! Here Are the Banks That Benefit

The past few years have been red hot for the mortgage refinance business at banks like Wells Fargo (NYSE: WFC) and JPMorgan Chase (NYSE: JPM) . Low rates have created an environment where it made sense for virtually anyone to trade in their higher rate from years past for a new low fixed-rate loan.

But as rates have started to rise, banks must now find ways to buoy the mortgage businesses without the benefit of constant refinances coming in the door. The hope for mortgage lenders is that the burgeoning recovery in new home purchases can bolster mortgage volumes as the refi-boom winds down.

In the video below, Motley Fool contributor Jay Jenkins discusses positive data just released from the Federal Housing Administration. The FHA's data indicates that for traditional banks like Bank of America (NYSE: BAC) to non traditional lenders like MetLife Bank (subsidiary of insurance company MetLife (NYSE: MET) , it's still possible to originate profitable loans without sacrificing quality.

Will higher rates push the banks back down? Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Fool contributor Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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